IES Holdings, Inc. (IESC) | The Buildout — AI Infrastructure
The Verdict
IES Holdings is a contractor and infrastructure-product supplier operating four segments: Communications, Residential, Infrastructure Solutions, and Commercial & Industrial. Its AI-infrastructure role is physical rather than compute: it installs network infrastructure inside data centers, builds power and data-center projects, and manufactures custom generator enclosures used in data centers. The company does not disclose AI-specific revenue or backlog.
| Market Cap | — |
| Revenue (TTM) | $4.0B |
| Revenue Growth | +22.7% |
| EBITDA Margin (TTM) | 13.1% |
| Net Cash | $311M |
| Earnings Beats | 3 of 4 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- Backlog reached $3.862 billion at March 31, 2026, up 113.1% year over year; growth was concentrated in Communications, Infrastructure Solutions, and Commercial & Industrial.
- Communications backlog rose 102.2% to $1,377.3 million, and Q2 FY2026 Communications revenue grew 34.6%.
- Commercial & Industrial gross margin expanded from 21.4% to 28.6% on strong execution on certain large data center projects.
- Infrastructure Solutions backlog reached $1,019.8 million, up 104.6%; the segment makes custom generator enclosures used in data centers.
- Fiscal 2026 capex guidance was raised to $145 million to $160 million to support organic growth.
What We’re Watching
- Backlog quality: $1,515.0 million of the $3,862.1 million backlog is agreements without enforceable obligation; Infrastructure Solutions has only $281.5 million enforceable RPO against $1,019.8 million backlog.
- Residential deterioration: Q2 FY2026 revenue fell 9.5% and operating income fell 71.8%; one unnamed Residential customer was 12.0% of consolidated revenue in FY2024 and FY2023.
- DBM Global: announced August 10, 2026 for about $650 million, but no closing date, conditionality, or share-count detail is disclosed.
- C&I margin durability: the 28.6% gross margin was tied to 'certain large data center projects'; a reversion toward the prior 21.4% would change the earnings trajectory.
The data-center and power-infrastructure thesis is strengthening in the order book, with backlog roughly doubling or tripling in Communications, Infrastructure Solutions, and C&I. The main offsets are Residential deterioration and the gap between reported backlog and enforceable RPO. The open question is whether the large non-enforceable backlog converts to revenue, especially in Infrastructure Solutions.
Earnings Beat
Fiscal Q3 2026 revenue was $1,242.7 million, up from $974.2 million in the March quarter. Gross margin was 27.4%, and EBITDA was $178.5 million, a 14.4% margin. Net income was $256.1 million.
| Metric | Q3 FY2026 | Q2 FY2026 | Q3 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $1.2B | $974M | $890M | +39.6% |
| Gross margin | 27.4% | 24.5% | 26.9% | +50bps |
| EBITDA | $178M | $128M | $124M | +44.4% |
| EPS | $12.68 | $5.45 | $3.82 | +231.7% |
Management tone: No current FY2026 earnings call is available. The current record from the press release and 10-Q shows an expansionary posture: management raised capital spending guidance, is integrating acquisitions, and acknowledged Residential weakness while pointing to multi-family backlog growth for fiscal 2027.
Management Guidance
Management raised fiscal 2026 capex guidance to $145 million to $160 million to support organic growth. Gulf Island is not expected to contribute meaningfully to earnings in fiscal 2026; management expects benefits in fiscal 2027. Management also said first-half fiscal 2026 multi-family backlog growth should benefit fiscal 2027. No formal revenue or EPS guidance was provided.
Trajectory
Revenue is accelerating sequentially: from $871.0 million in the December quarter to $974.2 million in March and $1,242.7 million in June. Consolidated gross margin reached 27.4% in fiscal Q3 2026, up from 24.5% in the prior quarter. The growth is concentrated in Communications, Infrastructure Solutions, and Commercial & Industrial, while Residential revenue is contracting.
The Model
The model projects fiscal 2027 revenue of $3,972 million and EBITDA of $528 million, a 13.3% margin. For fiscal 2028, the model projects revenue of $4,890 million and EBITDA of $743 million, a 15.2% margin. The near-term is anchored by the existing backlog and current segment momentum; the outer year assumes continued conversion of the data-center and power-related order book onto a larger revenue base.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $3.4B | $4.0B | $4.9B |
| YoY Growth | — | +17.8% | +23.1% |
| EBITDA | $431M | $528M | $743M |
| EBITDA Margin | 12.8% | 13.3% | 15.2% |
Projections are the median of 5 independent model runs. The model’s revenue sits 3.7% above analyst consensus.
Management raised fiscal 2026 capex guidance to $145 million to $160 million to support organic growth. Gulf Island is not expected to contribute meaningfully to earnings in fiscal 2026; management expects benefits in fiscal 2027. Management also said first-half fiscal 2026 multi-family backlog growth should benefit fiscal 2027. No formal revenue or EPS guidance was provided.
What Could Go Right — and Wrong
- Backlog converts to revenue, especially the $1,839.2 million of RPO expected to be recognized in the next 12 months.
- Communications and Infrastructure Solutions sustain 30%+ revenue growth with stable or improving margins.
- Commercial & Industrial holds gross margin near 28.6% on a larger revenue base as backlog converts.
- Gulf Island repositioning succeeds and contributes to results in fiscal 2027.
- Multi-family backlog growth converts to Residential revenue and stabilizes the segment.
- $1,515.0 million of backlog never becomes enforceable; Infrastructure Solutions has $738.3 million of non-enforceable agreements against $281.5 million enforceable RPO.
- Residential keeps deteriorating and the unnamed 12.0%-of-revenue customer reduces work.
- C&I gross margin reverts from 28.6% toward the prior 21.4% as project-specific execution fades.
- Hyperscale data-center capex slows; Communications, C&I, and generator-enclosure demand decline.
- DBM Global integration disrupts operations and adds commodity and execution complexity.
Looking Ahead
The next 12 months hinge on converting a large order book into revenue, particularly in Commercial & Industrial and Infrastructure Solutions. Management expects Gulf Island to begin contributing in fiscal 2027 and points to multi-family backlog growth as a fiscal 2027 benefit. The pending DBM Global transaction, if it closes, would materially expand structural steel and industrial services, but no closing date is given.
- Fiscal 2026Capex execution — Tests the raised $145M–$160M spend supporting organic growth.
- Fiscal 2027Gulf Island contribution — Management expects repositioning to benefit results in fiscal 2027.
- Fiscal 2027Multi-family backlog conversion — First-half multi-family backlog growth expected to benefit fiscal 2027.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $2.9B | $3.4B | $4.0B | +16.9% |
| Gross Margin | 24.1% | 25.4% | 25.9% | +135bps |
| EBITDA | $338M | $431M | $1.7B | +27.4% |
| EBITDA Margin | 11.7% | 12.8% | 13.1% | +106bps |
| Net Income | $219M | $306M | $559M | +39.6% |
| Free Cash Flow | $189M | $219M | $818M | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)25.9%
- EBITDA Margin (TTM)13.1%
- Net Margin (TTM)14.0%
- ROIC42.4%
- FCF Conversion43.8%
- SBC / Revenue0.4%
The Company
IES Holdings designs and installs integrated electrical and technology systems and provides infrastructure products and services across four segments: Communications, Residential, Infrastructure Solutions, and Commercial & Industrial. Communications builds network infrastructure inside data centers, Commercial & Industrial has power and data-center expertise, and Infrastructure Solutions manufactures custom generator enclosures used in data centers. The company does not disaggregate AI-specific revenue or backlog.
The company operates through a distributed footprint: Communications runs 41 offices from Tempe, Arizona; Residential has 99 locations from Sugar Land, Texas; Infrastructure Solutions has 15 locations from Massillon, Ohio; and Commercial & Industrial has 17 offices from Houston, Texas. The executive office is leased in Greenwich, Connecticut. IES is both a contractor and a manufacturer of physical equipment; it completed the Gulf Island Fabrication acquisition in January 2026 and has a pending agreement to acquire DBM Global.
Business Segments
Competitive Landscape
The source material names two documented competitors: EMCOR and Everus Construction. Neighbor intelligence describes both as large, national-scale electrical and infrastructure contractors converting strong data-center and electrical-construction demand into record backlogs. IES does not disclose data-center revenue or win rates, so the source offers no direct evidence of share gains beyond segment-level results.
- EMCORDocumented competitor; neighbor intelligence shows electrical construction revenue +33%, RPO $15.62B, and data center work +50%.
- Everus ConstructionDocumented competitor; neighbor intelligence shows record backlog of $3.68B and E&M backlog up 22%.
Supply Chain
IES Holdings sits between electrical and generator/steel component suppliers and customers in data centers, housing, and industrial facilities. No neighbor transcript in the supplied set mentions IESC by name; most supplier and customer links are inferred.